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We value your privacy. We may collect personal information from you such as identifying information (name, address, driver's license number), transactional information (products or services purchased and payment history), digital network activity (interactions with our website, IP address), geo-location data, audio recordings and other forms of personal information. We use this information for business, marketing and commercial purposes, including but not limited to, providing the products and services you request, processing your claims, protecting against fraud, maintaining security, confirming your identity and offering you other insurance and financial products.

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Have you mastered these insurance policy basics?

Why bother measuring your insurance literacy? Simple: the more you know, the better able you are to protect yourself, your family and your largest investments. Test your policy knowledge and learn more with this short quiz.

TRUE OR FALSE?

Your homeowners policy should equal the estimated replacement cost of your home, not the purchase price.

Your homeowners insurance policy covers flood damage.

A solution for people who want extra levels of liability insurance protection above the limits provided by their auto and homeowners policies — protecting finances and family — is called an overflow policy.

Your address may impact your auto insurance rate.

Your life insurance policy should cover 10 times your yearly income.

ANSWERS

True.
It's up to you to choose the policy and limits that meet your needs, but it's best to insure your home for at least 100% of its estimated replacement cost — the cost of repairing or replacing your home to restore its original condition. Estimated replacement cost is different from market value or purchase price. If you select a homeowners policy amount lower than the estimated replacement cost, certain policies may be unavailable to you. Periodically review your policy and limits with your agent and notify your agent of any changes or additions to your home.

False.
Homeowners policies typically exclude flood coverage. Adding coverage may be worth looking into, no matter where you live. According to FloodSmart.gov, more than 20% of all flood claims happen in moderate- to low-risk areas. State Farm® agents enrolled in the NFIP Direct Program are able to write and service flood insurance policies for qualifying homes directly through the federal government program, NFIP Direct.

False.
A Personal Liability Umbrella policy layers on top of your existing underlying policies to provide extra protection when home and auto liability limits are exhausted. Your agent can help explain how a Personal Liability Umbrella policy can help ensure that your family and financial health are protected in the event of a covered crash or lawsuit.

True.
People who live in densely populated areas — noted for higher occurrences of crashes and theft — will likely pay more for auto insurance than those who live in rural areas, where crashes and theft are less prevalent. Other factors that may influence the cost of auto insurance: vehicle type, coverage and driving record.

False.
There is no "one-size-fits-all" formula for selecting life insurance policies — it's a personal matter.

Want to know more? Enhance your knowledge of insurance by talking to your State Farm agent. Establishing an open dialogue with your State Farm agent is the best way to answer any questions you may have.

This document contains only a general description of coverages and is not a statement of contract. All coverages are subject to all policy provisions and applicable endorsements, and may vary by state. For further information, please see a State Farm® agent.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. State Farm makes no guarantees of results from use of this information.